Windi v University of Papua New Guinea [2020] PGSC 69; SC1979 (31 July 2020)

SC1979

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 109 OF 2018

BETWEEN
FELIX WINDI & DEBBIE WINDI
Appellants

AND
THE UNIVERSITY OF PAPUA NEW GUINEA
First Respondent

AND
KERAM BROTHERS HOLDING LTD
Second Respondent

AND
NATIONAL DEVELOPMENT BANK
Third Respondent

AND
ALEX TONGAYU, Registrar of Companies as Representative of Defunct Company, Vichy No. 93. Ltd.
Fourth Respondent

AND
ROMILY KILA-PAT. Secretary for the Department of Lands & Physical Planning
Fifth Respondent

AND
BENJAMIN SAMSON, Registrar of Titles, Department of Lands & Physical Planning
Sixth Respondent

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Seventh Respondent

Waigani: Salika CJ, Batari & Makail JJ
2020: 28^th & 31^st July

SUPREME COURT – Appeal against discretionary judgment – Refusal of leave to file defence out of time – Principles relevant to exercise of discretion – Explanation for default – Delay – Explanation for delay – Defence on merit – Interest of justice

CIVIL – Fraud – Two titles to property – Competing titles – Authenticity and validity of title – Natural justice – Right to be heard – Constitution – Section 59

Cases Cited:

Kante Mininga v. The State (1996) N1458
Lord & Company Ltd v. Inapero (2014) SC1624

Counsel:

Ms. B. Kumo, for Appellants
Mr. D. Kamen, for First Respondent
No appearance, for Second Respondent
Ms. C. Sopa, for Third Respondent
No appearance, for Fourth Respondent
No appearance, for Fifth, Sixth and Seventh Respondents

JUDGMENT

31^st July, 2020

1. BY THE COURT: This is an appeal against the discretionary judgment of the National Court delivered on 19^th June 2018 refusing the appellants’ application for leave to file their defence out of time.

Exercise of Discretion

2. The discretion conferred on the primary judge is exercised based on four basic principles, they being:

• Promptness of the application.
  
• Where there has been delay, a reasonable explanation for it.
  
• Reason or explanation for the default.
  
• Defence on merits.
  

3. In recent times, the Court has taken into account the all encompassing consideration of the interests of justice test.

Brief Facts

4. The facts as briefly stated are that the appellants and the first respondent (University) are in dispute over a residential property. Each claimed as having a valid title to it, the University claiming earlier in time, that it purchased the property from a company called Vichy No. 93. Limited which has since been de-registered and under the custody and control of the Registrar of Companies and that the appellants’ title was procured by fraud.

5. The University has commenced proceeding in the National Court to have the appellants’ title quashed on the grounds of fraud. It was by writ of summons (writ) with a statement of claim endorsed to it pleading the factual allegations of fraud and its particulars as required by the National Court Rules (Rules).

6. The writ was served on the appellants and they were required by the Rules to file a defence within 30 days after the time to give a notice of intention to defend. They did not for reasons that they were lay persons and did not know their obligations to the Court imposed by the Rules.

7. The delay was almost two years by the time they sought leave to file their defence out of time. The primary judge rejected their explanation for the delay and dismissed their application.

Delay

8. The appellants rightly did not urge us to find in their favour in relation to the primary judge’s rejection of their explanation for the default and delay in bringing the application for leave. It was open to the primary judge to reject their explanation because their default could have been easily and quickly attended to had they engaged a lawyer, regardless of them being lay persons and their ignorance.

Defence on Merits

9. The focus of the appeal was on the question of whether the appellants have demonstrated that they have a defence to the claim of fraud against them.

10. They asserted that they had purchased the property through a mortgage sale after the previous title holder (owner), the second respondent, defaulted in its loan repayment to the third respondent (Bank) and the Bank put it up for sale by way of a public tender.

11. They were not informed or aware of the University’s prior title and acted on the representation of the Bank to purchase it. It was sold to them for K30,000.00 and they bought it in good faith. They rely on the defence of bona fide purchaser.

12. The second respondent was a no show at the hearing and since the commencement of the appeal while the Bank has supported the appellants on the basis that they have a clear title to the property following the successful mortgage sale. It also did not deny receiving money from the sale of the property.

13. That may be so but a quick perusal of the title deed produced to us as part of the appeal documents in the appeal book raises serious questions and doubt as to its authenticity and validity. On the face of it, it is riddled with spelling errors, mis-spelling of words, omissions of letters forming English words including the correct name of the second respondent as the previous registered proprietor.

14. A title deed which is, on the face of it, riddled with errors or omissions does not place the appellants in a strong position to defend their title as bona fide purchasers and the primary judge would not be wrong to reject, give little or no consideration to it.

15. The errors or omissions in the title deed further raised the question whether the appellants as prudent purchasers had undertook due diligence by conducting their own search at the Registrar of Titles Office to verify that the title was free of any encumbrances prior to purchasing the property.

16. There is not much for the appellants to contend for and stand on to support their defence of bona fide purchaser where they have not undertaken due diligence.

Interests of Justice

17. However, the task of ascertaining the true facts surrounding the grant of two titles including the purchase and transfer of titles to the University by Vichy No. 93. Limited and the appellants from the Bank at different times is one for the National Court to undertake. It is not one for us to do.

18. We can only point the parties to the errors or omissions in the appellants’ title deed to urge them to seriously consider the ramifications connected to that title and consider other options available for the appellants. Perhaps a claim for damages against the second respondent and the Bank might be a better option for the appellants to pursue.

19. In the same vein, the University has not produced a copy of its title for our consideration and rightful so because the evidence of that has not been tendered as the matter has not yet reached the trial stage.

20. Where there are co-defendants and all but one has not filed a defence, it would be prejudicial to that defendant to defend it if the claim proceeded to trial: Kante Mininga v. The State (1996) N1498.

21. It is also advisable in a case where fraud is alleged against a registered proprietor that it is proved at trial and the registered proprietor is allowed and given the opportunity to defend it: Lord & Company Ltd v. Inapero (2014) SC1624.

22. In this case, the appellants are at the centre of the controversy because they asserted that they have a title to the property. The University also has a competing claim to the property based on a prior title. If fraud is proven against the appellants without them being heard in their defence, it would amount to a denial of natural justice under Section 59 of the Constitution. As a consequence, they would lose out completely. They will be the ultimate losers while the second respondent and the Bank will stand to gain from this controversy.

Conclusion

23. While the delay is inexcusable, it would not be in the interests of justice for the appellants not to be given an opportunity to defend the allegations of fraud against them. We would allow the appeal on this ground and grant leave to the appellants to file their defence out of time.

Order

24. The orders are:

1. The appeal is upheld.
   
2. The decision of the National Court of 19^th June 2018 is set aside.
   
3. Leave is granted to the appellants to file their defence within fourteen (14) days of this order.
   
4. The appellants shall pay the costs of the appeal to be taxed, if not agreed.
   
5. Time for entry of these orders shall be abridged to the date of settlement, by the Registrar, which shall take place forthwith.
   

________________________________________________________________
Jema Lawyers : Lawyers for Appellants
Kamen Lawyers : Lawyers for First Respondent
In-house counsel : Lawyers for Third Respondent
Solicitor General : Lawyers for Fifth, Sixth and Seventh Respondents